TNAG-0239-FCO40-275-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 37

PRIME MINISTER

COTTON TEXTILES

CONFIDENTIAL

Commotivice Dep

Minister of technology toys,

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12/10

Pittorian Me Bottomley (Mr Galing her Licorice /MrFai/ED. Su S. Towinien / de Wilfni/S.A.D. Mr Hankey (owerican depo.

We are about to resume the discussions begun by the previous Administration with the Commonwealth countries affected by our intended introduction of a general tariff on cotton textile imports in place of the current quota system of protection. Before we do so, I think you may wish to be reminded of what is involved.

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At present our imports of cotton textiles are controlled by fairly detailed quota arrangements. There is also a tariff on non- Commonwealth, but not on Commonwealth, imports. For man-made fibre textiles, however, with which cottons are virtually interchangeable, there is no quota control, but tariffs on both non-Commonwealth and Commonwealth imports.

The policy was announced by the previous Government, in July 1969, of abandoning on 1.1.72 the present system of quota 'control of cotton imports in favour of a tariff on imports from all sources, including the Commonwealth, thus bringing cotton textiles into line with man- made fibres. This is not only logical, but also followed a recom- mendation by the Textile Council which represents the UK industry. It will have the effect of giving the industry a coherent and predictable framework within which to undertake the necessary invest- ment in order to improve its competitiveness.

I do not think there should be any question of changing the policy. We did not challenge it when in Opposition and indeed the Textile Council were told privately that we supported it. And the line which Ministers agreed to take on textiles in the context of the current discussions of the UNCTAD Generalised Preference Scheme was postulated on the basis of continuation of the move to get rid of quotas.

Officials have considered whether it might be advantageous vis-a-vis the negotiations for entering the EEC to defer the date of the changeover, and agreed that on balance it would not be.

We propose therefore to proceed with the implementation of this policy, the next important step being to negotiate the necessary clearance from the Commonwealth countries concerned principally India, Pakistan and Canada. The policy is of course fully known to these countries, and preliminary discussions have already been held with some.

Commonw

I am sending copies of this minute to the Foreign and Commonwealth Secretary, the Chancellor of the Exchequer, the President of the Board of Trade., the Minister for Overseas Development and to Sir Burke Trend.

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October 1970.

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"John Davies